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Purloined letters & invisible gorillas: Paul Seabright’s Princeton in Europe talk

By Richard Marshall.


Paul Seabright and the 2012 Princeton in Europe Lecture.

Economics is becoming a naturaliased science whereby models based on findings in the behavioural and cognitive sciences, anthropology, sociology and psychology are replacing fantasies of clean and tidy rationality. Paul Seabright is one of the bright stars of this transformation, as was evidenced by his dazzling, erudite and brilliant Princeton In Europe talk ‘On Lying, Risk Taking and the Implosion of the Euro’. The equally brilliant Diane Coyle read it as an extension of a workshop at the Toulouse School of Economics in 2011, written up as ‘The Invisible Hand Meets the Invisible Gorilla.’ Distracted, even a man in a gorilla suit can be missed. At her Enlightened Economist blog Coyle summarises his thesis: ‘Put briefly, we are very bad indeed at paying attention to obvious events, and particularly when either change is gradual or there is a lot going on at the same time so it’s all very confusing.’

She continues: ‘The crisis has many causes, it is a complicated phenomenon. Greece – like Belgium – should not have qualified for Euro membership in the first place. The competitiveness of the southern European economies is poor, so for example, the proportion of young Spaniards going to university declined in the 2000s. The loss of the tool of devaluation was crippling. Government spending was unlikely to be controlled, especially as Greece was in the 2000s the world’s fourth biggest importer of arms – extraordinary fact. There was a housing bubble in Spain and Ireland. And so on. The point is that many causes contributed, and unfurled over a long period of time.’ What Seabright contends is that, rather like Dante at the beginning of his Comedia, we are in a desert setting where misreading signs is common, and gaps open up inside what is known. Later I suggest that this is the world of Kierkegaard’s ignorant knower.

In answering the question as to why no one saw the crisis coming, Seabright argues that lack of attention meant that the relevant facts were missed. A nasty moral discourse has been implemented seeking scapegoats as a result. Outsiders wonder if insider liars operated at crucial levels in the financial system to hide what they knew. Insiders don’t repudiate the moral discourse implied by the suspicion. Rather they respond by seeking other scapegoats. Accused in the aftermath of deliberately lying to hide the salient facts, experts fend off accusations of their own failure by substituting a different moral tale. They counter by telling a moral tale contrasting Southern fecklessness with Northern probity. Seabright reasons that just as there were neither liars nor conspiracies, the fecklessness or probity of individual nations is also irrelevant. He startlingly showed that Greece, for example, need be no more dangerous to the Eurozone than Florida, for example, or the nearly broke California is to the USA. If the USA is not facing an imminent breakup of its Union, but Europe is, then the Euro crisis is poorly explained in terms of good vs bad behaviour. Seabright points to the settlements governing the contrasting unions as being more saliently informative.

For example, the USA has a settled agreement that understands that Florida, say, will be in debt, and therefore will be paid for by everyone else. The settlement is about agreed expectations about what to do with its aged. There is no equivalent settlement in Europe largely because its Union has been understood in terms of commercial deals. Seabright pointed to the startling fact Germany’s healthy arms exports largely caused Greece’s unhealthy balance of trade. A mutually agreed dependency drove the Greek/Euro situation. Seabright makes the point clear; blaming the fecklessness of Greeks for its problems is to substitute an unjustifiable moral discourse for a clear economic one involving the compliance and direct involvement of Northern (German) states.

Yet a chorus demanding monsters or idiots to account for bad events is a psychological and cultural commonplace. Outsiders blame greedy bankers and lying, paid-off economists. Insiders blame feckless Greeks, Irish, Spaniards and Italians. Seabright warns that the tendency is counterproductive, like placing moral agency on earthquakes or disease. Moral discourse replaces genuine explanation and understanding.

Seabright explains that the failure to anticipate the crisis and take remedial action was the result of a blindspot preventing experts from seeing what was happening. The blindspot hid salient facts. Seabright suggests psychological mechanisms of attention deficit explain the blindspot.

The phrase ‘hidden in plain sight’ captures a subtle blindspot phenomenon. If you want to hide a book, place it in the library. It is in plain view in one sense, but it is also deeply hidden. Edgar Allen Poe’s ‘The Purloined Letter’ is the classic literay example of this. The detective, intent upon discovering the hidden, secret meaning, fails to understand that the letter is the vital clue, and that it’s meaning is staring him in the face. Seabright brilliantly expanded on this insight. The general body of information used to understand, evaluate and explain economic trends and events was also the perfect environment for inadvertently hiding the particular information that would have allowed people to understand, evaluate and explain the oncoming catastrophe. Like a red book in the library of red books, the relevant information, although in plain sight, did not appear to be significantly different from non-relevant information.

Experts were in a condition of ignorant knowing. They knew everything that would have been needed to anticipate and prevent the crisis except the knowledge required to act upon it. Seabright made explicit again and again that all the facts of the crisis were known. No one lied about them, no one hid them. Nor were they ambiguous or obscurely framed in unfamiliar formats.

He likened the experts in the years before the crisis of 2008 to pilots of the doomed Air France 447 flight from Rio in 2009. On a crash trajectory where warning systems explicitly told them that they were going to crash the pilots didn’t take preventative action. Warnings were unambiguous, explicit and repeated. The plane’s computer analysis of the situation was accurate and complete and the information was being communicated in obvious and direct terms. In the case of this particular tragic case, they were physically loud and unavoidable. Yet the trained, intelligent and experienced experts were unable to act on this direct, salient and unambiguously communicated information. Analogously, Seabright pointed to the pre-crisis experts. They had all the information needed to predict catastrophe in forms that they were trained to understand. Yet they were unable to transform this knowledge into preventative action. Why?

Seabright explained the phenomenon as a blindspot caused by psychological mechanisms of attention deficit labelled change blindness. Experts were lulled. They felt secure. They stopped being suspicious and so absorbed bad news as good. Change happened too slowly for detection. It involved vast complexity. Relaxed by habit and the appearance of non-critical change, experts missed critical fine-grained details. Relevant information appeared bundled up as ‘business as usual’.

Seabright’s talk was brilliant and wide-ranging. He suggested that psychologically we are ill-equipped to easily detect the relevant factors hidden in clear sight. His solution was to offer ways in which we might correct our inattention to obvious events. Many blindspots are psychological and can be interrogated. We can train ourselves not to be fooled by many of these. Seabright reiterated his cool insights from The Company Of Strangers. Cognitive science supports the view that models of perfect rationality in decision-making are fantasies.

Nicholas Humphrey, of the LSE and Cambridge, in a forthcoming book discusses how experiencing phenomenal consciousness can change an individual’s consciousness. He argues that consciousness is motivational, encouraging you to do things that you couldn’t do otherwise. This supports Seabrooke’s change blindness thesis. By giving consciousness a motivational role Humphries’ thesis points up the connection between (conscious) attention and action. Lack of consciousness (of experts knowing) results in a lack of motivation for acting on the knowledge.
However I am cautious in buying his conclusion that the phenomenon is solely one of attention deficit. I appeal to work elsewhere showing the ineffectiveness of knowledge in guiding behaviour to supplement, not supplant, Seabright’s account. Groovy philosopher Eric Schwitgebel has studies showing that the moral behaviour of ethics professors is no better than professors generally. In one study he found that the obscure specialist literature only ethics professors would want to read were twice as likely to be stolen from libraries than non-ethicist books. In another study with Schwitzgebel, Joshua Rust, Linus Huang, Alan Moore and Justin Coates it was discovered that ethicists were no more courteous than others in conferences, although environmentalists tended to leave behind less trash. Yet in terms of knowledge about ethical behaviour, these were undoubtedly experts. Their knowledge remained inert in the sphere of action.

In yet another study conducted by Schwitgebel and Rust it was discovered that although ethicists thought that not returning student e-mails was bad, they were no better than non-ethicists in responding. However, in reporting their responses they over-estimated vastly their actual rates of response. In yet another of their studies, ethicists self reported their actual voting behaviour pretty accurately but were woefully over-optimistic about their own levels of charitable giving. These and other studies cast doubt on people’s abilities to self-report accurately even knowledge about our own behaviours and beliefs. In these cases it doesn’t seem plausible to think that greater attention would result in better behaviour. These ethicists are attending to the salient facts more than most of us and still lack the capacity to behave as they know they should.

Schwitzgebel asks us to consider the fact that responses to scenarios vary according to the order in which scenarios are presented. Tania Lombrozo claims that unconscious or emotional processes determine responses to many scenarios and that reported commitments are merely post hoc rationalizations of these unconscious decisions. Tons of stuff from Josh Knobe and the xphi-ers support the idea that there are more reasons explaining why experts couldn’t prevent the crisis than just Seabright’s ‘lack of attention.’ Further consideration suggests that guarding against a repeated failure to respond will be more difficult than perhaps Seabright suggested.

Philosopher Jennifer Lockhart argues that the nineteenth century Danish philosopher Soren Kierkegaard interrogated the idea of the ignorant knower. An ignorant knower is someone who knows something, is ignorant of the knowledge (and so acts as if she hasn’t the knowledge) and is ignorant of the disjunct between her knowledge and her actions. The peculiar problem of this kind of case is that adding further relevant knowledge aimed at removing the ignorance is ineffective. The ignorant knower is someone in a position where she knows the right stuff but no matter how much of this knowledge she has she acts as if she hasn’t got it.

A paradox of the Seabright talk is now revealed. A room full of the smartest experts were given the knowledge that was needed to change policy and attitudes. Yet if, as Kierkegaard would surmise, they were all ignorant knowers, the additional direct knowledge presented to them by Seabright would be ineffective. In such a scenario, the new direct knowledge would be inert. It would not provide the experts with the capacity to act on it.

In contrast to direct knowledge, of the sort communicated in Seabright’s talk, indirect knowledge is knowledge that brings awareness of the conflict between the knowers knowledge and her actions to her attention. Indirect knowledge is a means of delivering the capacity of the knower to act. Parables and stories drawing out contradictions between an actors’ knowledge and her actions can do this. Jonathan Swift’s ‘A Modest Proposal is a well-known example of indirect knowledge. Kierkegaard’s use of indirect knowledge is a key element of his approach to philosophy. He wrote pseudonymously. His central texts are written in character. Direct communication of Kierkegaard’s own philosophical position is largely absent from his oeuvre. His philosophy is largely the communication of indirect knowledge.

If right, this Ignorant Knower diagnosis of the failure of experts to act on the knowledge about the crisis suggests we might require a different approach to solving the difficulty than Seabrights’. Additional direct knowledge (gained through greater attention, even better systems of direct knowledge transmission) will not give experts the capacity to act. A Kierkegaardian approach of indirect knowledge may be more efficacious.

Schwitzgebel and Blake Myers-Schulz in a forthcoming edition of Nous take a slightly different but connected approach. They make a distinction between believing and knowing in terms of the capacity to act. There they argue that belief is about being disposed to act and react ‘belief-that-P-ishly’. Knowledge is about having the capacity but not necessarily the overall disposition to act and react on information that P. From this perspective our economic experts were in a state where they had knowledge but didn’t believe what they knew.

Philosopher Roy Sorensen is the king of blindspot analysis. He makes a more disturbing discovery. Some blindspots are irremediable. In these cases it is rational to stop trying to discover anything more about the case. The ignorance is absolute. Vagueness is the parade case where to seek the last noonish second is futile. His analysis proves that knowledge does not distribute universally. In other words, just because something is knowable doesn’t mean everyone can know it. He has written extensively about this. Some simple examples suffice to show that his arguments are fertile.

We can capture the thought of the uneven distribution of knowledge by pointing out that many blindspots are non-symmetrical. Take ‘modesty’ as an example of this: it is impossible for me to know I am modest (for that would be immodest) but you can know it of me. G.E, Moore’s famous sentence ‘I went to the cinema on Friday, but I don’t believe I did’ supposes a knowing assertor that is impossible, even though the proposition is quite possibly true. This is a counterexample to the thought that all contradictions are logically expressible. It is an example of a species of sentences labeled the counterprivate. Counterprivacy restricts knowledge distribution according to who the knower is. Some counterprivate assertions are symmetrical. No one can know them. Vagueness is an example of this. I can’t, nor can an omniscient God, know the last second of youth, the last noonish second, the last hair before baldness or the point where a heap becomes a non-heap. Sorensen concludes that our knowledge is spotty, involving symmetrical and assymetrical blindspots. It distributes in an uneven, messy way. It belies tidy models. Economics adores tidy models. It should heed the warnings herein.

A final supplementary thought is a warning of the dangers of post hoc rationalization masquerading as evidence-based reasoning. Perhaps even the alert Seabright unwittingly emphasizes evidence supporting a preferred self-image. Experts are smart and educated. Suspicion falls on any proposal that suggests that being smart and educated are vital solvents of evil.

The suspicion thus falls on his contention that there is some connection between the lack of post-school education in Spain, for example, and their current crisis. The contention is that lack of formal schooling leading to higher education, in particular in the sciences and technology, has caused Spain’s current difficulty. When jobs for uneducated estate agents disappear, mass unemployment amongst the young results.

Admirably wanting to avoid a moral discourse, Seabright doesn’t quite avoid a new one that congratulates the educated over those not so educated. Formal schooling and economic success are presented as if the relationship was causal. There are reasons for doubting such a simple connection. Seabright himself showed that the reason why Spain’s youth has such high unemployment is that the conditions for employment abruptly changed. Sure, one response is to say that the youth need to adapt and go back to school. Like Seabright I think education is a great social and moral good. But we could bring back the estate agents by bailing Spain out. Removing the nasty moral discourse, as Seabright suggests, removes the main barrier for doing this.

The issue is why one solution should be preferred over the other. The intellectual experts discussing solutions to our economic crisis should be wary of endorsing a solution that endorses a self-image they understand and like (its their own self image after all !) and discounts alternatives that don’t. We should be wary because we might be guilty of ignoring a blindspot of the kind Seabright has so brilliantly warned us about.

This blindspot (self-congratulation and self-love translated into post hoc rationalization for policy) is not isolated to Seabright and economic experts. Super-smart Stephen Pinker has recently argued that being smart makes you morally better than stupid people. He cites studies showing that smart liberal intellectuals do less crime, cooperate more, support free trade leading to peace, are forces for democracy and prosperity, are less likely to want civil war and when in leadership roles avoid war better than non-smart people.

On Pinker’s thesis, we might wonder why, if intellectuals are so good at thinking out solutions, they mess up so much, as in the economic crisis. Pinker thinks that intellectuals can’t apply their own brilliant ideas to their own lives but others can in theirs. So outsiders should heed what they have to say. In his The Better Angels of Our Nature Pinker writes that ‘… Intellectuals, in the words of the writer Eric Hoffer, “cannot operate at room temperature.” They are excited by daring opinions, clever theories, sweeping ideologies, and utopian visions of the kind that caused so much trouble during the 20th century. The kind of reason that expands moral sensibilities comes not from grand intellectual “systems” but from the exercise of logic, clarity, objectivity, and proportionality. These habits of mind are distributed unevenly across the population at any time, but the Flynn Effect lifts all boats, and so we might expect to see a tide of mini- and micro-enlightenments across elites and ordinary citizens alike.’

The equally smart but more skeptical Eric Schwitzgebel finds this a form of dubious self-flattery. Schwitzgebel admires Pinker but detects a lack of self-suspiciousness in Pinker that makes him nervous. He worries that Pinker isn’t worried that he might be self-deceived. Hubris is always a threat.

Seabright delivered an impressive, scintillating and brilliant talk about the truth about the economic crisis. But if the pilots of that doomed Air France 447 flight from Rio acted typically not aberrantly then we need to do more than know. We need the capacity to act.

Richard Marshall is biding his time.

First published in 3:AM Magazine: Thursday, June 7th, 2012.